As always, whether or not you can retire early depends on your situation. How do you want to live in retirement? How much do you have saved today? How long do you plan to live?
When I was a young person just starting out in my career, it was the mid-1980s. Inflation was high and many workers still had pensions. I remember hearing my older colleagues talking about retiring early. Some of them were trying to retire by 60.
How has retirement changed over time?
I had a couple cousins who went to work at the local Caterpillar tractor plant after high school. They started at age 18. They joined the United Auto Workers union, worked the second shift and farmed in the daytime. Those guys put in 30 years and retired at age 48 with a full union pension.
Later in my career, I knew folks who had worked their entire career at good companies. In the 1990s they had a pension, profit-sharing and a 401(k) that allowed them to sock away a lot of money each year. They were busy running the numbers to figure out how to retire in their 50s. And many of them could get it done.
Today, as I talk with clients and friends about retirement, some of them are asking, “What is early retirement now?” And it’s a good question.
For people born in the 1950s and 1960s the answer to this question is shaped by a few large trends.
- We are healthier than our parents. This means we will likely be retired longer than our parents. Many of us will see our 100th That means if you plan to retire at age 55 you are planning to fund 45 years of retirement. That’s a pretty high target.
- We have fewer employer-sponsored retirement benefits. This means many of us will need to delay retirement by at least a few years in order to:
- Save some extra money and
- Reduce the number of years we will be spending our retirement savings
- Many of us work jobs that are an important part of our identity. Often, those jobs are not as physically demanding as the jobs our parents had. We like our work. We might want to have less pressure. We might want to have shorter hours. But we don’t necessarily want to completely stop working any time soon.
Today, it’s much more likely that you will quit you job and switch to another part-time job. Maybe you love golf and get a job at a golf course. Maybe you are handy and like to work at Home Depot. But you are likely to make the switch away from a career-oriented higher earning job and toward a less-demanding job that still pays enough to help stretch your retirement savings. By doing this, you get some of the benefits of retirement without all the expense.
How can a financial advisor help me?
But as you can see, it’s not simple. There are a lot of things to consider. So if you are serious about a really good answer to the question “Can I retire early?” I suggest you meet with a CERTIFIED FINANCIAL PLANNER™ professional.
If you meet with a planner who is always an advocate for the client– a fiduciary advisor – and only works for the client – a fee-only advisor – you can be confident that the financial advice you get is focused on your best interests and is a good fit for your complete situation.
CFP® professionals take a multi-faceted approach to your financial planning process that includes budgets, risk protection, retirement planning, investment management, taxes and estate planning. All these related aspects of your financial life are what really matter when it comes to reaching your goals.
A CFP® professional can help you create a financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand when is the right time for you to retire.
Yes, I am a CFP® professional. I’m always a fiduciary and I only work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.
If this article has you thinking about your own circumstances, contact my office at firstname.lastname@example.org. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.